Memory price gains diverge as BofA sees scope for additional shareholder returns at Korean manufacturers

Where could additional dividends and buybacks come from?

BofA sees shareholder returns as a near-term catalyst: following its recent 40 trillion won buyback, SK hynix could pay an additional special year-end cash dividend; Samsung could launch a new buyback. The two companies may discuss such arrangements at their earnings calls on October 28–29; neither has announced a new plan.
The assessment rests on a combination of cash flow and valuation. On BofA’s annualized free cash flow measure for the fourth quarter of 2026, SK hynix and Samsung exceed 200 trillion won and 300 trillion won, respectively, corresponding to potential annual shareholder returns of more than 100 trillion won and 150 trillion won. These annual figures are extrapolated from the quarter’s run rate.
BofA assumes a buyback-to-dividend split of 60:40 for SK hynix and 40:60 for Samsung, reflecting differences in shareholder structure. The bank also notes that most DRAM companies trade at roughly 3–5 times 2026–2027 earnings, below the broader group of AI semiconductor peers.

The key differences are supply allocation and inventories. Capacity shifting to HBM and server DRAM is pushing up conventional DRAM prices; channel inventories are generally low today, whereas inventories were unusually high after the cloud computing boom in the fourth quarter of 2018. On that basis, BofA expects memory supply to remain tight relative to demand through 2028.
Long-term orders also provide support. BofA expects Samsung’s quarterly contract prices to have room to rise even under long-term agreements, and expects it to continue securing high-priced long-term orders for delivery through 2029–2030. Its optimistic view rests on continued tight supply and long-term purchasing.

SK hynix is focused on ramping up 12-layer HBM4. BofA expects the product to account for more than 50% of its HBM sales by the end of the fourth quarter of 2026. Additional production of 8-layer HBM4 depends on whether Nvidia pays a premium of about 10% per bit, or whether its margin can exceed that of the 12-layer product. Price and margins are thresholds for turning customer demand into additional supply.
Samsung is focused on increasing its HBM share and prioritizing expansion of 12-layer HBM4, followed by HBM4e in 2027, rather than expanding 8-layer HBM capacity. Its migration to the 1c process will also focus on HBM, alongside a faster ramp-up of Pyeongtaek P4 and construction of P5; capacity expansion is concentrated on high-end products.

DRAM remains strong: DDR5 spot prices rose 5%–6% from October to the time of the report. Fourth-quarter DRAM contract prices under negotiation are broadly in line with BofA’s expectation of a quarter-on-quarter increase of 5%–10% or more, led by high-end LPDDR5. Spot strength is consistent with the direction of contract negotiations, supporting the bank’s positive view on forthcoming guidance.
NAND is noticeably weaker. BofA expects PC and smartphone NAND contract prices to rise only slightly, while enterprise SSD prices could increase by a mid-single-digit percentage. The average monthly spot price of 512Gb NAND wafers fell about 5%–6% in each of September and October; high prices and further price increases are distinct things.
Exports also present two sides: South Korean semiconductor exports in the first 20 days of October totaled 27.5 billion dollars, up 222.5% year on year but down 19% from the same period in September. Still-strong year-on-year growth supports the positive cycle assessment, while the month-on-month decline constrains interpretations of continuously accelerating near-term momentum.